Emergency savings: Protecting your future financial security

The best way to save for unexpected financial shocks is to have two separate emergency funds: a rainy day fund and an emergency fund.

A rainy day fund is money you might dip into every once in a while to cover an unexpected expense, like a medical bill.

An emergency fund is a bigger, longer-term savings fund. This money should be able to cover at least three to six months worth of living expenses in case you can’t work for a period of time, for whatever reason.

If you’re starting from scratch, these goals may seem impossible — but you can get there!vThe best way to approach saving is to start with baby steps and then build up from there.

IMPORTANT NOTE: One very important thing to remember about emergency savings is that the money should be easily accessible if you ever need it.

So you want to keep the money somewhere safe and where you can get to quickly, like in a savings account. The money may not grow much, but you also don’t risk losing it.